After all this time, Center City Philadelphia is still losing steam as a corporate center. Is that a bad thing?
In the last two years, publicly traded Cigna, Sunoco, Arkema, Dow Chemical's advanced materials division (formerly Rohm and Haas), and Destination Maternity all moved their headquarters to the suburbs or out of state, following the vanished banks, insurance companies, railroads and manufacturers.
A few public companies have moved downtown - DuPont spin-off Axalta Coating Systems from Wilmington, and construction-project manager Hill International moved in from South Jersey.
But mostly, since 2000 Philadelphia "has witnessed a long, slow march to branch office-ville," says Howard Trauger, boss at Schuylkill Capital Management and a student of the local corporate scene since his days managing family fortunes at the former Girard Trust Co. Pittsburgh, less than one-fifth Philadelphia's size, can brag of bigger banks, manufacturers and energy companies, Trauger says.
It's not that jobs are leaving Philadelphia. To the contrary: The city has reversed years of suburban employment drain, and its job growth leads the region.
About 680,000 people worked in Philadelphia as of June 30, the most in 15 years and 19,000 more than worked here in mid-2007, before the Great Recession. By contrast, employment in the suburbs is still down 4,000 from where it was eight years ago, according to U.S. Bureau of Labor Statistics data.
Still, there are fewer financial, government and information-based jobs in the city than there were a decade ago. Factory jobs continue going away: The recent Mondelez (Nabisco), Hostess, Perfecseal, Atkore, and Amoroso shutdown plans will eliminate hundreds of well-paid jobs.
The new jobs are in jobs related to health care, colleges, hotels, restaurants and tourism. Comcast is building a second tower (with two more expansion sites nearby) next to the once-mighty Pennsylvania Railroad's old home base. The former Centre Square financial complex now boasts Penn Health as its main tenant.
"We still have a dearth of corporate headquarters," acknowledges Paul Levy, head of the Center City District. "Except for Comcast, they are not setting the pace." But "the trends are positive," he says. "We'd be doing a whole lot better with a more competitive tax policy."
Big corporate headquarters have been bypassing high-tax older cities such as Philadelphia for years, for lower-cost towns in Texas and Georgia, or subsidies from financially despondent states such as New Jersey and Connecticut, says Ian Anderson, research director at broker CBRE's Philadelphia office.
In their absence, " 'creatives' are taking over Center City," Anderson says. The growth is in "lawyers, consultants, advertising," health care specialties, tech offices at large organizations and at small firms on "N3rd Street" (the growing tech business corridor from Old City to Northern Liberties,) and other enclaves.
So many bright young people have moved to new or redeveloped downtown, university and neighborhood apartment buildings that SEPTA platforms are crowding in the morning with recent grads commuting out from where the action is to less-interesting office centers such as Radnor or Wilmington.
Will all the kids moving in bring more new employers chasing them? "Some companies are going to wish they hadn't left, in five or 10 years," Anderson predicted.
Bill Luff, head broker at Colliers International's Philadelphia outpost, is nostalgic for the early 1980s, when Cigna and the former Bell Atlantic ordered new Market Street towers and billion-dollar banks still lined the street. He pines for the big ones that got away in 2007, when BlackRock and Brown Bros. Harriman were negotiating to move acres of offices here from the New York area - then canceled in the recession.
What's different now: "The residential scene here is exploding, and companies have to be thinking about coming to town" to follow young workers, Luff says hopefully.
Maybe the departure of big, slow-moving firms leaves room for growth. Homegrown banks (Beneficial, for example) and accounting/consulting firms (EisnerAmper) have leased big Center City spaces and raised their profiles as larger rivals merged out, says Marc Brownstein, whose family ad agency, Brownstein Group, has weathered the city's transitions since 1964.
"Do we need more office buildings? Yes," Brownstein says.
Commercial real estate investors haven't profited from Philadelphia's low office demand and rents, I protested.
"I think it's going to come," Brownstein affirmed. The apartments, the restaurants and bars, the young graduates are all here. "New York, L.A., San Francisco, Washington, they have all become so expensive. Philadelphia by comparison is a bargain."